Taxation in Bulgaria
The taxation in Bulgaria could be classified in two basic categories: direct (corporate tax, income tax for physical persons and withholding taxes) and indirect taxes (VAT tax and excise duties).

Corporate tax
According to the Law for Corporation Taxation, all legal entities and non-personified   companies, carrying out economic activity in the country, are subject to a corporation tax at the rate of 10%. For the purposes of this law, non-personified companies are equal to legal entities. Local legal entities are subject to taxation of all their profits and incomes, no matter where they were carried out. Foreign legal entities are taxed by a corporate tax only for their activity in Bulgaria.

Income tax for physical persons in Bulgaria

According to the Law for taxation of the income of physical persons, object of taxation is only the income of physical persons - both local and foreign. The law regulates the taxation of physical persons, including from the activity of a sole trader. Local persons are all persons, with no regard to their citizenship, who have a permanent address in Bulgaria or persons who live in Bulgaria for more than 183 days every 12 month period. Local physical persons are taxed for their income, obtained from sources in Bulgaria and abroad. Foreign physical persons are taxed only for income accomplished in Bulgaria. Income from dividends and liquidity shares of physical persons are also taxed according to this law. From 01.01.2008 incomes of physical persons are taxed at the rate of 10% flat tax.

Withholding taxes

The tax, withheld from the source, according to the Law for corporate taxation is withheld and installed only when the person who received the respective income is a legal entity – local or foreign. The income, obtained by a physical person, is taxed pursuant to the Law for corporate taxation. By withholding tax, dividends and liquidity shares are taxed, distributed to (personified) local legal entities for the benefit of:
1. foreign legal entities, except for the cases, when dividends are not accomplished by a foreign legal entity by means of economic activity in the country;
2. local legal entities, who are not traders, including municipalities.
This tax is final and is withheld by local legal entities, which distribute dividends or liquidity shares. The tax rate is 5%.

VAT tax

The new VAT law has been in effect since 01.01.2007, when Bulgaria became a member of European Union. The tax rate is 20%, except for supplies, clearly stated in the law as 0% tax.

Vat registration

The VAT registration is obligatory or optional. Obligatory registration – every taxable person with a turnover of  50 000 BGN or more for a period, not longer than the last 12 months before the current one, is obliged within 14 days from the end of the taxation period when reached the said turnover, to submit a registration form in the respective territory department of the National Revenue Agency. No matter what the taxable turnover is, every entity, established in other EU country is subject to obligatory VAT registration, entity, which is not founded on the territory of Bulgaria and carries out taxable goods supplies, fit in Bulgaria at its expense, as the recipient is not a VAT registered person. Optional registration – every taxable person, no matter what his turnover is, can get VAT registered, if he wishes to.


The excise duty is an indirect duty and is taxed on the following goods:
• alcohol, including wine and beer;
• tobacco products;
• energy products and electricity
• cars;
• coffee and coffee extracts.
The said goods are subject to excise due, except when are under a regime of a deferred excise payment. The liability for excise payment arises from the date of liberation of the excise goods for consumption.

Avoidance of double taxation
Bulgaria has concluded Treaties for avoidance of double taxation with 53 countries.